Figure below shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. Price (dollars per month) $2,500 2,000 1,500 1,000 500 Supply Demand 0 200 400 600 Quantity (apartments) What is the value of consumer surplus after the imposition of the ceiling? • What is the value of producer surplus after the imposition of the ceiling? • What is the value of the deadweight loss after the imposition of the ceiling? Suppose that instead of a rent ceiling, the government imposes a price floor of $2,000 per month for apartments. • • What is the value of consumer surplus after the imposition of the price floor? What is the value of producer surplus after the imposition of the price floor? What is the value of the deadweight loss after the imposition of the price floor?
Figure below shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. Price (dollars per month) $2,500 2,000 1,500 1,000 500 Supply Demand 0 200 400 600 Quantity (apartments) What is the value of consumer surplus after the imposition of the ceiling? • What is the value of producer surplus after the imposition of the ceiling? • What is the value of the deadweight loss after the imposition of the ceiling? Suppose that instead of a rent ceiling, the government imposes a price floor of $2,000 per month for apartments. • • What is the value of consumer surplus after the imposition of the price floor? What is the value of producer surplus after the imposition of the price floor? What is the value of the deadweight loss after the imposition of the price floor?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter3: Demand And Supply
Section: Chapter Questions
Problem 32RQ: What is producer surplus? How is it illustrated on a demand and supply diagram?
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Transcribed Image Text:Figure below shows the market for apartments in Springfield. Recently, the government imposed a rent
ceiling of $1,000 per month.
Price
(dollars
per month)
$2,500
2,000
1,500
1,000
500
Supply
Demand
0
200
400
600
Quantity
(apartments)
What is the value of consumer surplus after the imposition of the ceiling?
•
What is the value of producer surplus after the imposition of the ceiling?
•
What is the value of the deadweight loss after the imposition of the ceiling?
Suppose that instead of a rent ceiling, the government imposes a price floor of $2,000 per month for
apartments.
•
•
What is the value of consumer surplus after the imposition of the price floor?
What is the value of producer surplus after the imposition of the price floor?
What is the value of the deadweight loss after the imposition of the price floor?
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